ABC News 1978 1979

Rip van Winkle's new world order: The fall of the Soviet bloc has left the IMF and G7 to rule the world and create a new imperial age

BYLINE: By JAMES MORGAN

SECTION: Pg. I

LENGTH: 1913 words

SHUT YOUR eyes and think: what would the world be like if the October Revolution of 1917 had never happened? Answer: it would be rather like it is today. If Rip van Winkle had gone to sleep in 1912 and woken 80 years later, he would understand a good deal without knowing anything of Lenin, Stalin, Hitler, communism, fascism, two world wars and the end of empire. Only Russia would be a dreadful disappointment: its present state might seem to mark a step or two backwards.

Reports of 100 years ago from Russia, and elsewhere, have a strange resonance now. There was a fearful famine; the Illustrated London News had a drawing of peasants tearing the thatch from their hovels to feed to starving cattle. From London, there were pictures of families evicted from their newly-acquired homes. The jokes in Punch were about the pretensions of the German Reich to a leading role in world affairs. In the Berliner Tageblatt, Eugen Wolf, an explorer and foreign correspondent, reported that 'conditions in Africa leave much to be desired.

' It is not just a question of arguing that we are now back in Victorian times and that the game of nations can resume normal play. The world has moved on; but it must be faced as a direct descendant, in great matters and in small, of that which existed 100 years ago and to which the past 75 have almost been irrelevant.

A distinguishing mark of this age is that a large number of 'exploded myths' have suddenly become living reality. It is only five years since EJ Hobsbawm wrote The Age of Imperialism characterising the period 1875-1914 as one that was gone forever and could be recaptured only as a bourgeois fantasy. Bourgeois fantasies are now concrete reality and it is the myths of Marxist historians that lie in ruins.

Quite unnoticed, imperialism is back in fashion. Nobody calls it that, except for those who believed it never went away and, therefore, fail to recognise its present character. It is in the know-how funds and systems for technology transfer operating in eastern Europe and, above all, in a vast framework under construction in the developing world; bringing in experts from Washington, Paris and Frankfurt to tell others how to run their affairs.

Englishmen draw up plans for privatisation in Prague. In India last October, the Frenchman who runs the International Monetary Fund, Michel Camdessus, went to New Delhi to nod approvingly at plans drawn up there for economic and social reform to the standard IMF template.

The construction of a new global system is orchestrated by the Group of Seven, the IMF, the World Bank and the General Agreement on Tariffs and Trade (Gatt). But it works through a system of indirect rule that has involved the integration of leaders of developing countries into the network of the new ruling class.

This weekend, leaders of the developing countries will be listening attentively to the warnings from the G7 finance ministers and the IMF at their spring meetings in Washington. Yegor Gaidar, the Russian deputy prime minister, will be told to ensure the agreed programme is followed - or there is no aid.

This week the IMF's half-yearly economic outlook singled out the developing countries in general, and the Latin Americans in particular, for praise: they had accepted IMF policies and followed them far more loyally than the richer members of the Fund.

It is not just a question of there being no 'systems argument' any more, as Sir Ralf Dahrendorf, former head of the London School of Economics, puts it. There is just one class of people in charge.

In India last October, I found the men in charge enthusiastically ditching the post-colonial orthodoxies of autarky, independence and self-reliance and speaking the same language as the neo-liberals of Washington and London. At the Chilean embassy in Washington last April the finance minister, Alejandro Foxley, entertained journalists with a scathing attack on the policies of the industrialised world. But it was not about exploitation, nor the need for more aid. It was about the need for free trade and the hypocrisy of the rich nations in demanding open markets in the Third World while closing their own.

The vehicle by which the free-market gospel has been transmitted has received scant attention in the rich countries but is omnipresent in the media of the poor: the Structural Adjustment Programme. It is like the Middle Ages, when missionaries went out from western Europe to the eastern half and taught market gardening and architecture, but the real aim was to spread the word of God. The SAP is the word of God today.

The official line is that it is a natural product of the disinterested advice the IMF and World Bank have offered their clients over four decades. In fact, the SAP emerged from the two organisations when they had to find new ways of using their money. Both had come to the limits of their ability to resolve mere technical problems: how to supply electricity and highways; how to deal with a short-term balance of payments problem. Successes had been limited, anyway, partly because it was becoming harder to manage bits of economies without managing the lot. So, each developed the means of doing just that.

There was a clash between them in 1988. But that was resolved, and they run large parts of the developing world and eastern Europe while insisting that the governments concerned are merely implementing their own plans. 'We are there to help,' as the British used to say.

The essence of the SAP is to encourage governments to follow the right kind of reform policy. A developing country can receive large, cheap loans if it adopts the programmes embodied in the orthodoxy of (more or less) balanced budgets, devaluation, privatisation, and a hearty welcome for foreign investment.

The evolution of structural adjustment programmes has involved the total integration of the IMF and World Bank into the life of the target countries. They have become involved in welfare programmes to minimise the instability that could wreck the new order. A host of social instruments in these countries are organised by the new imperialists. It does not end there.

In recent years, the declarations of G7 summits and IMF-World Bank annual meetings have echoed a further, concern by the rich about the way the poor run their affairs. There is now to be strict control, supposedly, on arms exports to developing countries - an inevitable consequence, perhaps, of Saddam Hussein.

The industrialised nations have promoted what is known as a Global Environment Facility in the World Bank. Its purpose is to bribe developing countries into building non-polluting industrial projects: in other words, to prevent others doing what the industrial countries have done.

It was a nice coincidence that the world's trade ministers opened their present, perhaps doomed, global negotiations in Uruguay in 1986. The choice highlighted another return to pre-1914 orthodoxies. Uruguay was the classic prosperous, peripheral economy, the Switzerland of south America, a nation that grew rich on free access to the vast food market of Britain and could erect an exemplary welfare state on the profits.

The re-establishment of such prosperity is a primary aim of the Uruguay Round. It forgets entirely the old 'borrow and industrialise' programmes that dominated development thinking for 40 years after 1945. Today, a nation should again be able to grow fat on raising cattle. Developing countries not only accept what would have been regarded as a subordinate role in the world economy two decades ago - they support the demand for a system where that subordination can be exercised.

Finally, of course, there is the now-regular insistence on human rights. It was built into the policy for recognising Croatia and will prove entirely meaningless.

There is a portmanteau phrase of the New Imperialism to cover all this: 'good governance.' It has unsettled Third World establishments but these, apart from one or two of the less savoury Islamic regimes, have no ideological resources to combat the pressure.

Calling this phenomenon the New Imperialism will be resented. But imperialism was not always a pejorative term. It described the integration - admittedly by force rather than choice - of the world economy. The British, 100 years ago, saw it as a civilising power. The Americans, too: President McKinley wrote in 1898: 'The mission of the United States is one of benevolent assimilation, substituting the mild sway of justice and right for arbitrary rule.' That is the policy the US and its allies say they are pursuing today. And it is more or less accepted at face value everywhere outside the last communist redoubts.

Now, this all is amazingly different from, say, 1970, but not very different from 1900. Twenty years ago I was living in Malaysia, writing for the Far Eastern Economic Review. If I even alluded to 'human rights' I was treated as a colonial leftover promoting some cynical western ploy in the Cold War. The phrase 'Westminster democracy' was a term of abuse. Today, leaders such as Daniel Arap Moi of Kenya suffer direct foreign interference, and lose aid money, when they articulate their opposition to Westminster democracy.

Within the old imperial lands, things are returning to the status quo ante. The First World War put an end to the horizontal relationships that existed among the upper echelons of society. The English ruling class was more familiar with its German counterpart than with its own countrymen in the slums of London. The retreat into the nation, and the consequent concern with domestic social policy that was caused by the conflicts of the 20th century, has ended. Inequality grows as the wealthier strata absorb ever-higher shares of a nation's income. Huge salaries for managing directors are justified, with a straight face, by reference to the 'international market in senior executives.

' In his book The World of Work, published in November, Professor Robert Reich concluded: 'When we speak of the 'competitiveness' of Americans in general, we are talking only about how much the world is prepared to spend, on average, for services performed by Americans. Some Americans may command higher rewards; others far lower. No longer are Americans rising or falling together, as if in one large boat. We are, increasingly, in different, smaller boats.

' This situation replicates that of the English rentier class before the First World War. The evolution of the domestic business cycle, the happiness or misery of the industrial working class, were matters of abstract concern to those who made their living from Chinese railway bonds or Russian government stock. They could travel Europe with a single currency and seldom require a passport.

It is daunting to think that the cataclysmic events since 1913 are insignificant historically, but it is obvious that the Russian revolution will not play the role in history that is assigned to the French. The period 1914-1990 has already been called 'the short century' and appears even now as an aberration.

Rip van Winkle might well be able to understand our world better than we do because he would be free of the baggage of the past 80 years. There would, however, be one misapprehension.

At some moment, he would almost certainly remark: 'But aren't you afraid of the socialists?' James Morgan is economics correspondent of the BBC World Service.

SUBJECT: THIS DAY IN HISTORY (90%); INTERNATIONAL ASSISTANCE (87%); INTERNATIONAL ECONOMIC ORGANIZATIONS (84%); TRADE TREATIES & AGREEMENTS (77%); FAMINE (76%); HISTORY (76%); EMERGING MARKETS (76%); PRIVATIZATION (76%); CONSTRUCTION (73%); DEVELOPING COUNTRIES (72%); DEVELOPMENT BANKS (66%); INTERNATIONAL TRADE LAW (63%); INTERNATIONAL TRADE (63%);

ORGANIZATION: INTERNATIONAL MONETARY FUND (93%); LONDON SCHOOL OF ECONOMICS (56%);

COUNTRY: RUSSIAN FEDERATION (91%); INDIA (90%); GERMANY (79%); AFRICA (79%); EUROPE (79%); EASTERN EUROPE (77%); FRANCE (67%); ENGLAND (57%); CENTRAL EUROPE (56%);

STATE: FRANKFURT AM MAIN, GERMANY (71%);

CITY: BERLIN, GERMANY (79%); PARIS, FRANCE (67%); NEW DELHI, INDIA (66%);

COMPANY: INTERNATIONAL MONETARY FUND (93%); LONDON SCHOOL OF ECONOMICS (56%);

LOAD-DATE: April 26, 1992

LANGUAGE: ENGLISH

Copyright 1992 The Financial Times Limited;